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Keeping the Lid On

ESCALATING tuition, a perennial complaint in higher education, has become particularly acute in the last five years. In that time, tuition and fees have gone up 14 percent at four-year private colleges (when adjusted for inflation), with the average price reaching $23,712 this year. As the economy slows, tuition threatens to put an even tighter pinch on pocketbooks.

But under pressure from parents, Congress and one another — higher education is, after all, a free market — colleges have tweaked the financial aid model.

Many of the changes seem to benefit the well-to-do. Starting with Harvard in December and spreading across the Northeast corridor in recent months, the nation’s most selective institutions have not only increased aid for lower-income students but also reduced — sometimes sharply — what families earning incomes far higher than the national mean are expected to pay. Parents who make six figures may now find Yale more affordable than the University of Connecticut. Even institutions without Ivy League assets are substituting grants for loans in their financial-aid packages.

Ostensibly, the idea is to ease the financial burden, but colleges also want to attract top students. “All these institutions are highly competitive within their niches,” says Tony Pals, a spokesman for the National Association of Independent Colleges and Universities. “As soon as an institution like Harvard or Yale does something large like this, everybody is going to take note. Over the last few months the announcements have been surprisingly quick.”

Below are some of the ways colleges and universities are trying to make themselves more affordable — and more desirable — to students and their families. Who benefits, and by how much, is not always so clear-cut.

In the world of higher education, “middle income” is like a shoe size: its definition changes depending on the brand. Next academic year, Stanford will waive tuition for families with financial need that make less than $100,000 a year. At Harvard, where average family income is north of $160,000, students whose parents make $120,000 to $180,000 will pay, on average, 10 percent of that income; the percentage declines steadily for families making less until hitting zero at the $60,000 mark. Budding bulldogs at Yale will get a similar deal.

“You’re seeing a lot of these new projects that are looking at families with income up to $75,000 or $100,000,” says John Walda, president of the National Association of College and University Business Officers. “That’s a real trend, and it’s responsive to the perception that independent colleges in particular have become out of reach financially for many families.”

While institutions explain their programs using income-level cutoffs, whether a family demonstrates “need” is a subjective calculation. Officials weigh various factors — income, financial holdings, home equity, medical expenses, number of children in college — to determine how much they think a family can afford to pay toward a child’s education. The new policies modify the formula in parents’ favor. In the fall, for example, Harvard will no longer consider home equity in determining a family’s ability to pay. Stanford will consider the higher cost of living in some parts of the country. Yale will eliminate the first $200,000 in assets from its calculation.

Even if on a free ride (some colleges will cover room and board as well as tuition), a financial aid recipient will often still be on the hook for several thousand dollars in “student contribution,” which can be paid through an outside scholarship or work-study program. “We believe every student should be contributing something toward their education,” says Bill Schilling, director of student financial aid at the University of Pennsylvania, where the self-help contribution will be up to $2,250 a year.

Loans to Grants: Everyone Elite in the Pool

Beginning next fall, many prestigious institutions will replace loans in their financial aid packages with grants, allowing students to graduate debt free. (No-loan policies at some colleges, including Dartmouth, Haverford and Rice, begin with incoming freshmen, which might not settle too well with sophomores.)

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A REAL ESTATE The Cooper Union, thanks to gelatin and Chrysler.Credit
Michael Nagle for The New York Times

Each college sets a different benchmark. Lafayette’s policy will kick in for a family making under $50,000, and M.I.T.’s at $75,000. Colby’s grant-only aid system will apply to families with need regardless of income.

Eliminating loans, says Stephen Collins, a Colby spokesman, “may have been a bigger step for Colby, but we want this place to be affordable to lower-income students.” Its program will cost it $1.5 million a year, financed in part by double-digit returns on its $600 million endowment and a $50 million fund-raising campaign.

Mr. Collins acknowledges that administrators worried that Colby would fall behind other colleges. “There was a sense this is going to happen in the next several years,” he says. Colby’s view was: “Let’s just do it now.”

College as Cellphone Contract: Lock It In

A growing number of colleges are freezing tuition for each incoming class, good for the next four (or five) years of college. Entire state systems, including those of Georgia and Illinois, offer flat-rate plans. The University of Colorado, Boulder, guarantees that tuition won’t go up for out-of-state students. A plan for the State University of New York is awaiting legislative approval.

The idea is to give families a sense of financial certainty. But one side effect is that to maintain revenue, some universities have had to raise tuition significantly for each subsequent class. In 2004, the first year of its fixed-rate program, George Washington University increased tuition by almost 17 percent. “Like any business, you need a revenue projection,” explains Tracy Schario, a spokeswoman. Without the flat rate, the increase “would have come out to 4 percent a year.” George Washington is now labeled the nation’s most expensive college; next fall, tuition, fees and mandatory housing will come to $50,607.

Some colleges have decided the benefit to families isn’t worth the risk. Pace University, for example, set tuition rates so high that enrollment began to plummet; last year, after four years of declines, Pace disbanded its fixed-rate program.

Lowering the Bottom Line

Blackburn College, a small liberal arts college in southern Illinois, has joined a handful of private colleges, mostly in the Midwest, that have taken an unorthodox approach to the tuition game: they’ve lowered their sticker price. In the fall, Blackburn announced it would drop its baseline charge 15 percent, to $13,500 from $15,720. The strategy proved an attention-getter: applications ran 10 percent ahead of last year. But to compensate for the loss in tuition dollars, the college has cut back on aid — all need-based aid and most merit aid from its own coffers — and plans to expand enrollment.

Officials say prospective students were turned off by the published price, and had dismissed the college without looking into tuition discounts.

“We found students were very confused by the process of determining the bottom-line cost,” says John Malin, Blackburn’s enrollment manager.

While tuition reduction, on the face of it, seems to improve access for low-income students, the affluent may benefit more. Students who can afford to pay full freight get a discount right off the bat, while poor students no longer get institutional need-based aid and must meet higher academic standards to qualify for merit aid.

Eureka College, Ronald Reagan’s alma mater, cut its tuition in 2004 to $13,000 from $18,700 and eliminated need-based institutional aid. Since then, average scores on standardized tests have increased and enrollment has grown about 43 percent, to 700 students. The expansion has largely been among the more affluent students that Eureka was hoping to attract, says Brian Sajko, who oversees admissions and financial aid. The decision to lower tuition, Mr. Sajko says, “is a way to think about who you are trying to serve, but also that you are a business. People at Harvard can put out a tablecloth and sit there quietly. But colleges like us need to wave that banner. We have to be a little more out there in the world.”

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GRATIS Maya Benami (left) and Rachel Saunders studying herpetology at Berea College.Credit
David R. Lutman for The New York Times

Muskingum College in Ohio is credited with being first to cut tuition across the board, in 1995. Others include Wells (New York), Heidelberg (Ohio), the College of Idaho and North Park University (Chicago).

Why don’t most colleges just cut their sticker price?

Donald Heller, director of the Center for the Study of Higher Education at Pennsylvania State, offers one reason: “There’s something we refer to in college pricing as the Chivas Regal effect. If an institution drops its price, it’s seen as a decrease in quality.”

No Tuition Here: Free-for-All Colleges

A handful of colleges have, for decades, quietly offered the best deal in higher education: $0 tuition.

Armed with a strong historical mission — along with aggressive fund-raising and, at some, student work programs that offset operating costs — administrators at free colleges all say they would dip further into their endowments before they would consider charging tuition. “It has to do with our whole reason for being,” says Joanne Singh, associate vice president for development at Berea College, in Kentucky.

With Congressional leaders questioning why more of institutions’ swollen endowments isn’t being used to make college cheaper, it’s worth considering those that manage without charging a penny of tuition, among them the College of the Ozarks, Webb Institute, Curtis School of Music, Franklin W. Olin College of Engineering and Deep Springs, a two-year college in the California desert.

Berea was founded in 1855 by abolitionists who sought to educate poor students in Appalachia. Today, the college retains a Christian character, and applicants must meet financial limits roughly parallel to standards for federal Pell grants. Students work a minimum 10 hours a week in jobs like broom making, horticulture and iron forging to help cover tuition and earn spending money.

With its $1.1 billion endowment, Berea ranks ahead of Dartmouth, Duke and the University of Chicago in money per student. Endowment returns cover about three-fourths of operating costs, but finances can be hard to maintain. “It’s very difficult, especially when there’s a downturn in the marketplace, because we depend upon our endowment to perform,” says Joe Bagnoli, Berea’s associate provost for enrollment management.

“We’re probably not going to be the school that has the $8 million piece of equipment,” Ms. Singh says. Yet it recently implemented a program that provides free laptops to all incoming freshmen; the computers are theirs to keep. Half of Berea’s students study abroad, with 50 percent paid by the college.

Gifts and bequests make up most of the endowment, though one traditional incentive for alumni giving — a leg up for offspring in admissions — probably doesn’t apply. Postcollege success lifts most alumni incomes beyond Berea’s ceiling for applicants, $52,000 for a family of four. “If we’ve done our job, their kids are not going to get in here,” Ms. Singh says.

In a very different setting — the East Village of Manhattan — the Cooper Union for the Advancement of Science and Art educates roughly 1,000 students of art, architecture and engineering, providing all with full tuition plus aid for living expenses. Founded in 1859 by Peter Cooper to provide city children the education he never received, it is one of the country’s most selective colleges, admitting only 10 percent of applicants. Cooper, a self-made industrialist who invented the gelatin dessert that became Jell-O, had the foresight to buy the future site of the Chrysler Building, which was completed in 1930. The building’s lease now provides nearly 45 percent of the Cooper Union’s revenue.

The college’s fortunes rise and fall with the real estate market.

Less than a decade ago, the institution had annual deficits of up to $15 million. But a series of real estate deals, including the conversion of an Astor Place parking lot to a 22-story apartment tower making $2 million a year, has helped the college to get back into the black — and to meet its commitment to keep education, as Cooper said, “as free as water and air.”

Correction: April 27, 2008

A picture caption in the special Education Life section last Sunday with an article about colleges that do not charge tuition referred incorrectly to Berea College’s $1.1 billion endowment. It exceeds Duke’s and Dartmouth’s endowment per student, not in total value.

Michael M. Grynbaum is a business reporter for The Times.

A version of this article appears in print on , on Page M228 of T Magazine with the headline: Keeping the Lid On. Today's Paper|Subscribe